IRANIAN FM VISIT FOCUSES ON ECONOMICS

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 004592

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/14/2017
TAGS: PREL PARM KNNP ENRG IR RS
SUBJECT: IRANIAN FM VISIT FOCUSES ON ECONOMICS

REF: MOSCOW 4506

Classified By: Ambassador William J. Burns for reasons 1.4 (b/d).


1. (C) Summary: Iranian FM Mottaki was in Moscow September
12 for what Russian officials characterized as a visit
devoted to the countries' economic relationship. The GOR
denied Mottaki's claim that Russia had agreed to finish
construction of the Bushehr nuclear power plant and supply
Iran with nuclear fuel, and said that discussions on these
issues were still ongoing. Downplaying the visit, Russian
officials emphasized that Mottaki's meeting with Rosatom head
Kiriyenko focused on the Iranian-Russian Intergovernmental
Commission that is due to meet in December in Moscow. While
Putin's planned trip to Tehran on October 16 for the Caspian
Sea Summit is motivated by GOR gas interests, Putin will be
accompanied by a Rosatom delegation seeking to advance
commercial nuclear prospects. Putin's message that Iran must
answer all outstanding concerns over its nuclear program will
be leavened by the GOR interest in commercial engagement -- a
balancing act that officials and experts believe essential to
distinguishing the Russian position from that of the U.S. and
preserving Russia's negotiation "influence.". End summary.

Mottaki Makes Big Claims for Moscow Visit
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2. (C) Iranian FM Manuchehr Mottaki was in Moscow September
12 for meetings devoted to Iranian-Russian economic
relations, according to contacts at the MFA and Rosatom. On
October 14, MFA Iran Desk Officer Oleg Ishmukhametov
downplayed the visit, stressing that the primary purpose of
Mottaki's visit was to meet with Rosatom head Kiriyenko, who
co-chairs with Mottaki the Iran-Russia Intergovernmental
Commission. The Commission, which is the main forum for
developing bilateral economic cooperation, last met in
December 2006 in Tehran and is due to meet this December in
Moscow.

No Agreement on Bushehr
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3. (C) GOR officials denied Iran's public claims regarding an
agreement with Russia to complete the Bushehr nuclear plant.
Vladimir Kuchinov, head of the International Relations
Department at Rosatom, told us that that expert level talks
on Bushehr, which he characterized as "technical" and
"difficult," were continuing in Moscow and Tehran. He dryly
added that Iranian claims such talks had concluded were
"overstated." Ishmukhametov stressed that the two sides had
yet to reach agreement on the issue of funds Iran still owed
to Russia for the project. He confirmed that Shmatko of
Atomstroyexport participated in the meeting and stated
publicly that Bushehr was ninety-five percent complete and
could potentially be completed next year. If the GOR decides
to do so, Ishmukhametov said Russia would probably deliver
fuel for the plant six months before it becomes operational.

Putin To Attend Caspian Sea Summit in Tehran
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4. (C) Our contacts noted that Mottaki and Kiriyenko
discussed a possible Putin visit to Tehran in October to
attend the Caspian Sea Summit. (Note: Putin foreign policy
advisor Prikhodko confirmed for the Ambassador that Putin
will attend the Summit and will meet with Iranian President
Ahmadinejad. End note.) Rosatom's Kuchinov told us it would
be "logical" for the Rosatom chief to accompany Putin on his
trip. The MFA's Ishmukhametov explained that the summit
would be an opportunity for the Caspian states, Russia, Iran,
Azerbaijan, Kazakhstan, and Tukmenistan, to move towards
agreement on disputed maritime boundaries that have serious
implications for access to oil and gas deposits in the
region. This process has been ongoing for several years and
probably would not be completed in Tehran. Note: Russia's
economic interests in Iran relate largely to competition to
supply energy, especially gas, to Europe and East Asia. Any
future agreements reached by Iran and potential transit
states (e.g. Turkey) and/or consumers is likely to lessen
Russian influence. End note.

5.(C) Ishmukhametov said that on the margins of the Caspian
Summit, Russia will discuss Iran's nuclear weapons program
and developments at the UNSC and IAEA. When asked to what
extent he saw a connection between Bushehr and Iran's nuclear
weapons program, Ishmukhametov claimed that the plant was an
"anchor" to keep Iran in the Nuclear Nonproliferation Treaty
(NPT). Russia could decline to complete the plant or deny
Iran future cooperation on civilian nuclear reactors if it
withdrew from NPT. As for the GOR's cautious approach toward
dealing with the Iranian weapons program, Ishmukhametov spoke
of the need to maintain good relations with an important

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neighbor and economic partner.

Russian Economic Interests Influence Iranian Ties
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6. (C) Experts we spoke with agreed that Russian economic
ties with Iran play a significant role in Russia's slow but
steady efforts to complete Bushehr, as well as the GOR's
general approach to the Iranian nuclear weapons program.
Mikhail Meyer, Director of the Institute of Asia and Africa
at Moscow State University, asserted that Russia not only
hopes to sell future reactors to Iran, but wants to be the
world's leading supplier of civilian nuclear technology.
Pointing to the recent statements by representatives of
Indonesia, Bangladesh, and Jordan that their countries are
considering acquiring civilian nuclear plants from Russia
(septel),Meyer said that economic considerations are
dictating a Russian policy that seeks to avoid entangling
commercial interests with international tensions. By
maintaining amicable relations with Tehran, Russia can play a
"useful" role in the region. According to Vladimir Evseev,
an expert on military and nuclear policy at the Russian
Academy of Sciences, this balancing act is made more
difficult by the fact that Iran remains a major competitor of
Russia in the gas market.

Comment
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7. (C) Hosting Mottaki for a discussion of nuclear
cooperation and Putin's expected participation in the October
summit reflect a GOR calculus that what little real influence
Russia has with Iran would be diminished if the GOR appeared
to be siding categorically with the U.S. in opposing the
Ahmadinejad regime. While we expect Putin to reiterate
strongly the international community's insistence that Iran
halt enrichment and answer all outstanding concerns over its
nuclear program, the divergence in tactics between the GOR
and its U.S. and EU partners remains.
Burns